PetroCaribe: Crude Blackmail

Thursday, June 30, 2005 | Latin America: Fidel Castro was on hand Tuesday with other regional leaders at Hugo Chavez's Caribbean energy summit. Odd, given Cuba has no oil and no economy. Odder still that Chavez gave him special treatment.

Chavez, Venezuela's president, greeted Castro with a big hug, much to the disdain of many countrymen. For them, Castro is neither oil buyer nor seller, but mendicant dictator who has so leveled Cuba's economy he can't even import oil at market prices.

But there he was, guest of honor in a conference intended to woo Caribbean states into Chavez's PetroCaribe alliance.

In a way, Castro is the sales pitch: Best friend Chavez ships him 90,000 barrels of Venezuelan oil a day (oil that's not Chavez's, but the state's, the opposition points out). In exchange, Chavez gets 30,000 Castro "doctors" who are little more than spies on a mission to monitor Venezuelans. All in all, an utterly insulting exchange.

Castro's visit shows the same deal is in store for other Caribbean states that must buy Venezuelan oil. Chavez is making them an offer of subsidized oil they can't refuse. The real price will be high, however. Caribbean states may be forced to take on the Cuban "doctors" who will keep an eye on them, probably as part of a package deal.

Castro has absolutely no legitimate reason to be making a conquering hero's appearance at an oil conference for the Caribbean's small but perfectly functional economies. He's an emblem of economic failure. His only reason for a grand appearance is to intimidate.

Chavez recently placed his Caribbean oil headquarters in Havana, an illogical move we have already described on this page. That will force Caribbean states to deal with the Cuban dictatorship if they want to see a drop of Venezuelan crude.

But it goes beyond that. On his windy TV show Sunday, Chavez sneered at nations that seek free trade with the U.S. and said they should instead join his PetroCaribe alliance with Castro.

A probable target of the tirade was the beleaguered Dominican Republic. It buys oil from Venezuela, but also seeks free trade with the U.S. through the Central America Free Trade Agreement.

With the potential threat of a Venezuelan oil cutoff — which actually happened to the Dominican Republic not long ago over a different dispute — there's some unusual pressure ahead.

The Venezuelan government showed photos of strained smiles between Leonel Fernandez, leader of the Dominican Republic, and Chavez, who — knowing the U.S. Congress is waffling on CAFTA — holds all the cards.

Clearly, Fernandez's small state is feeling the heat in its CAFTA commitment. If it wavers, we will have had a glimpse of pure intimidation worthy of real pirates of the Caribbean.